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LAFS Marketing and Monetization Lecture 2: Game Publishing


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Level 2 of the Los Angeles Film School's Marketing and Monetization class.

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LAFS Marketing and Monetization Lecture 2: Game Publishing

  1. 1. Level 2 David Mullich Marketing and Monetization The Los Angeles Film School
  3. 3. We’re Suddenly Millionaires Our rich Uncle Bim left us $2M (USD)!  We can save it  Risk?  Reward?  We can invest it  Risk?  Reward?  We can start a business  Risk?  Reward?
  4. 4. Let’s Make A Game! The Four P’s  Product  Price  Promotion  Place
  5. 5. The Place Retail Store (Traditional Publisher) Digital Distribution (Self-Publishing)
  6. 6. Which Is Better?
  7. 7. Traditional Publishing Advantages  Experience  Distribution  Marketing  Financials
  8. 8. Self-Publishing Advantages  Brand Development  Control  Financials
  9. 9. Factors To Consider  Do you need funding?  Do you have marketing experience?  Do you have operations experience?
  10. 10. Now Which Is Better?
  11. 11. Do Your Research!  Read Gamasutra daily  Follow developer blogs  Connect with movers and shakers on social media  Talk to retailers at brick-and-mortar stores  Visit industry meet-ups, conventions and trade shows
  13. 13. What’s The Difference Between A Video Game Studio and Publisher?
  14. 14. Studio vs. Publisher A game studio developers video games that are marketed and sold by a game publisher.
  15. 15. Game Developer (Studio)  Design  Programming  Art  Audio  Project Management  Testing  Business Development (Sales)
  16. 16. Game Publisher  Product Development  Legal  Finance  Marketing  Sales  Quality Assurance  Operations  Technical Support  Customer Service  Community Management
  17. 17. Most of All – Publishers are the Bank  Have the most money at risk  Cost of development  Cost of marketing  Cost of inventory  They reap a most of the rewards.
  18. 18. Publisher Pros and Cons Pros  Keep your equity  Money for development  Focus on project Cons  Likely loss of IP  Less flexibility to change direction  Funding project, not company
  19. 19. Let’s Say You Decide To Use A Publisher What factors would you consider in deciding which publisher to sign with?
  20. 20. Choosing A Publisher  Suitability of their portfolio and fanbase  Ability to promote and publish your game  Working relationship with other developers  Number of games they are publishing  Publishing articles written by their staff
  21. 21. World-Wide or Country-by-Country Model? World-Wide  Strong brand recognition of big publisher  Budget for marketing and shelf-space  Can finance games at early stages  Simplicity of contacts and communication  May overlook some territories
  22. 22. World-Wide or Country-by-Country Model? Country-by-Country  Larger pool of publishers to choose from  More difficult to distribute in US and UK  Negotiations happen more quickly  Less risk of project being canceled  Higher royalty rates  More focused marketing campaigns  More attention to your game in general
  23. 23. Pitching To A Publisher Publishers are not interested in ideas. Publishers are not interested in documents. Publishers want to see a prototype!
  24. 24. Tips For A Successful Pitch  Get In The Door  Design The Pitch  Assume Their Point Of View  Know All The Details  Be Organized  Rehearse  Be Passionate!!!  Show You Are Serious  Exude Confidence [but not Cockiness]  Be Flexible  Get Them To Own It  Follow Up Jesse Schell
  25. 25. More Tips  Give everyone a role  Have your laptop ready to go  Have a preloaded video ready  Talk about your game, not yourself  Talk money honestly
  26. 26. Creating An Emotional Connection Mad Men: Kodak Pitch For “The Wheel”
  27. 27. Congratulations! Your Pitch Was Successful!
  29. 29. Types Of Development Contracts  Work for Hire  Early Stage  Completion Funding  Pick-Up Deal Let’s take a closer look at each!
  30. 30. Work-for-Hire Contracts Publisher brings the developer a concept, property or franchise and the developer creates the game based on the publisher’s guidelines.  Great for establishing reputation  Usually requires a smaller staff  Least amount of negotiating power for developer  Flat fee, but reliable form of revenue  No retained rights to developer
  31. 31. Early Stage Development Deal Developer pitches a publisher on a game that they want to make and gets funding from the publisher to create the game.  Reserved for teams with solid track record  Requires detailed GDD and tech demo  Advances against royalties  Developer retains certain rights
  32. 32. Completion Funding Developer creates a game on its own dime and then at some stage in the development process brings the concept to a publisher that finances the rest of the game.  Good balance of creative freedom and negotiating power  Requires demo showing complete playability and unique selling points  Advances against royalties  Developer retains certain rights
  33. 33. Pick Up Deal Developer completes the game with its own money and then sells the essentially complete game to a publisher.  Gold master date is near  Strongest negotiating position for developers  Country-by-country or world-wide model  Advances against royalties  Developer retains most rights
  34. 34. On Publishers Start at 3:00
  35. 35. Advances  Never paid in one lump sum  Too risky  Bad for cash flow  Paid out over a series of “milestones”
  36. 36. Milestones  Typically paid against “deliverables”  Signed Contract  Documents (GDD, TDD, Schedule)  First Playable (Will it work? Will it be fun?)  Alpha (feature complete)  Beta (asset complete)  Gold Master (publisher approved to sell)  Source Code & Assets
  37. 37. Milestones  Production milestones (such as Alpha and Beta) are typically defined by:  Features: Degree of completeness  Assets: Percent final  Bugs: Number and severity allowable
  38. 38. Royalty  Percentage of every sale  Up-front money is an “advance” on future royalties  Advance must be “earned out” before true royalties are paid
  39. 39. Royalty Factors determining royalty:  Number of logos on box  Net receipts (deductions for credits and refunds for return)  Additional expenses:  Cost of Goods  Insurance  Shipping  Witholding taxes from foreign countries
  40. 40. Stupid Developer Trick  “I’ll cover all my costs with the advance and wait for profits when the royalties come.”  MOST GAMES NEVER EARN OUT (make a profit).
  41. 41. Royalty Protection Ways to protect your royalty:  Escalating royalties based on sales  Separate royalty for sublicensed distribution  Royalty reports with units manufactured, units sold, and wholesale price  Limit copies publisher can give away for free  Contract provision for auditing publisher’s books
  42. 42. Risk vs. Reward Video Game Developers vs Publishers: Who Wins? (12:33)
  43. 43. Other Contract Provisions  Definition of market coverage  Minimum marketing budget  Developer logo placement  Engine and common code rights  Ancillary rights  Secondary platform and sequel rights
  44. 44. Negotiation Steps 1. Prepare 2. Talk 3. Offers and Counter-Offers 4. Never Do This! Let’s take a closer look at each!
  45. 45. Step 1: Prepare Create a negotiation planning document.
  46. 46. Step 2: Talk  Strike up a conversation to build rapport  Ask about the issues  Show some trust to get some in return  Face and Honor Societies require far more nuanced and risky negotiation strategies
  47. 47. Step 3: Offers And Counter-Offers  The first person to make an offer, loses.  If you are made an offer, take time before making a counter offer  Take lots of notes  User counter-offers to triangulate sensitivities  If you need to walk, walk
  48. 48. Step 4: Things You Should NEVER Do  Enter a negotiation you’re not willing to walk away from  Negotiate one issue at a time  Negotiate for the sake of negotiating  Make open-ended offer  Make an offer you don’t actually like  Give up your IP or shares of your company  Rescind or modify an offer after it’s been accepted  Lie  Threaten
  49. 49. Remember A negotiation is a starting point, not the end game. The best deal is the one that gives you the most value while also making your counterpart happy.
  50. 50. Group Quest Put together a pitch for your game.  Prepare a 10-minute demo of your prototype  Use a laptop  Have back-up materials ready just in case  Give everyone a role  Rehearse first  Be prepared for a Q&A
  52. 52. Indie Development Extra Credits, Season 6, Episode 21 - So You Want to be an Indie (6:29)
  53. 53. Setting Up Your Business  Hire a lawyer to establish it as a legitimate business.  Hire an accountant or business consultant  Fund the company, not a game  Set goals and deadlines for evaluations  Manage by the numbers, not the guts
  54. 54. Building Your Team  Pick carefully whose on your team.  Fire if you must
  55. 55. Developing Your Game You can’t make AAA games, but avoid “one- off” games that are too simplistic. Even with simple games, have  Meaningful progress over time  Social features  Frequent updates
  56. 56. Launching Global A global launch does not mean just one launch:  Different platforms  Different distributors  Different languages Maximize your access points to customers!
  57. 57. Launching Global World use of languages:  English: 4.70%  Spanish: 6.15%  Mandarin: 14.4% Don’t forget to localize marketing materials as well as your product!
  58. 58. Going Global Country considerations:  No prohibition on advertising or data collection  Use standard digital stores  Are emerging markets Examples:  Germany  Spain  Portugal  Japan  Russia
  59. 59. Managing Your Business  Be an entrepreneur  Prepare for failure; aim for sustainability  After launching, just don’t sit back and check the bank account  Build a long-term relationship with players
  60. 60. Time Until “Independent Sustainability” Kitfox Games:  Leaving last job and finding company: 5 months  Montreal startup accelerator (at minimum wage): 9 months  Financial sustainability (Kickstarter and grant): 3 months Spryfox Games (11 games total):  3 profitable games  4 break-even games  5 unprofitable games  5 (or 20) unfinished prototypes
  61. 61. Time Until “Independent Sustainability”
  62. 62. What Are Indie Dev’s Biggest Mistakes?
  63. 63. 5 Biggest Mistakes Made By Indies 1. Lack of product positioning 2. Lack of benchmarking for trends and competitors 3. Underestimating the value of media content 4. Inadequate press kits 5. Failure to create community buzz
  64. 64. What Do These Mistakes Have In Common?
  65. 65. Forgetting To Do The Marketing!
  66. 66. Doing Your Own Marketing  The personal approach can work well  The amount of time and effort can add up!
  67. 67. Hire Outside Specialist  Freelancers and mini-agencies and big firms, oh my!  Some focus on PR, others on advertising, or a mix  Consider best fit for your budget!
  68. 68. Adding Marketing Person To Team Advantages:  Press likes to speak directly to team  More connected to your mission and projects  Quicker response to communications
  69. 69. Adding Marketing Person To Team Options:  Bring on a part-timer early on  Or give duties to someone on team with good communications skills  Set up a general email account so different team members can respond
  70. 70. Away Mission Determine the best way to get your game published.  List 3 advantages of traditional publishing  List 3 advantages of self-publishing  Explain which is better for your game and why